Binance to commit $1 bln for crypto recovery initiative

Changpeng Zhao, Binance's Chief Executive Officer attends the B20 Summit, ahead of the G20 leaders' summit, in Nusa Dua, Bali, Indonesia, November 14, 2022. REUTERS/Willy Kurniawan

Nov 24 (Reuters) - Cryptocurrency exchange Binance said on Thursday it was committing $1 billion to establishing an industry recovery initiative (IRI) to invest in companies from the digital assets sector.

The move comes at a time when the crypto market is teetering from the collapse of FTX, which is seeking Chapter 11 bankruptcy protection in the United States.

The unraveling of one of the biggest crypto exchanges in the world has also fanned worries around the industry's continued ability to draw investments from venture capital and private equity giants.

Binance said it intends to ramp up its commitment amount to $2 billion in the near future depending on need.

"We anticipate this initiative will last about six months and will be flexible on the investment structure -- token, fiat, equity, convertible instruments, debt, credit lines, etc," the crypto exchange added in a statement.

Zhao said while speaking at a conference in Abu Dhabi last week that there was significant interest from industry players in a recovery fund his company plans to launch to help cryptocurrency projects facing a liquidity squeeze, following the collapse of rival FTX.

He said such a fund would help "reduce further cascading negative effects of FTX" without giving an exact figure for the fund.

Several crypto firms have been bracing for the fallout from the FTX collapse, with many counting their exposure in millions to the beleaguered exchange.

Reporting by Akanksha Khushi and Manya Saini in Bengaluru; Editing by Anil D'Silva and Sandra Maler

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